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Courts

DC participants sue Home Depot, 2 advice providers over alleged fiduciary breaches

Two participants in Home Depot Inc.'s 401(k) plan have sued plan executives alleging that excessive fees and poor-performing investments represented a breach of their fiduciary duties under the Employee Retirement Income Security Act.

The participants also sued Financial Engines and Alight Financial Advisors, both providers of investment advice to the plan, alleging ERISA violations.

Home Depot DC plan executives "allowed participants to pay unreasonable fees to the plan's 'investment advisers,' first Financial Engines and later AFA (Alight Financial Advisors)," said the complaint filed Thursday in a federal district court in Atlanta.

"Financial Engines did almost nothing to earn these fees," said the complaint in the case of Pizarro and Smith et al. vs. Home Depot Inc. et al., which is seeking class-action status. "Since Financial Engines simply offered a robo-advisory service with cookie-cutter portfolios, its costs are minimal."

The 401(k) plan executivesallowed Financial Engines and Alight Financial Advisors "to receive asset-based investment advisory fees but failed to monitor those payments and the services," the complaint said.

Financial Engines and Alight Financial Advisors "are parties in interest who knowingly participated in the Home Depot defendants' breaches of fiduciary duty," making them liable, too, the complaint said.

“We are aware of this lawsuit but have not yet formally been served," said Amy Conley, Financial Engines spokeswoman, in an emailed comment. "We are reviewing the complaint and will respond in the appropriate forum. Financial Engines intends to vigorously address the allegations and defend against them, and are confident in the ultimate outcome. For 20 years Financial Engines has provided independent institutional-quality advice and management services to millions of employees of many of the country’s largest plan sponsors. Our fees are reasonable, fully disclosed and compliant with all applicable regulations.”

"We haven't seen the suit yet, but we're proud of the financial support and opportunities for saving that we provide our associates," said Stephen Holmes, a Home Depot spokesman, in an email.

"We do not comment on litigation," said MacKenzie Lucas, a spokeswoman for Alight Solutions, parent of Alight Financial Advisors, in an email. "Our model has always been and will continue to be fully transparent about all sources of revenue and fees we receive, so that plan sponsors and plan participants fully understand the cost of their plans."

The complaint also said fiduciaries of the Home Depot FutureBuilder 401(k) Plan "loaded the plan with severalunderperforming investment options" and then "failed to remove them despite years of deficient performance."

The plan had $6.5 billion in assets as of Dec. 31, 2016, according to its latest 11-K filing.